Tabreed Earns Dh320 Million in Nine Months as Financing Costs Rise After PAL Cooling Deal

Revenue rose 3% from a year earlier to Dh1.91 billion, helped by higher fixed capacity charges and added capacity, according to the results reported by Khaleej Times. EBITDA fell 2% to Dh955 million from Dh972 million, though the margin held at about 50%. The company did not give a year-on-year percentage change for net profit in its announcement.

The results show the cost of Tabreed's expansion. District cooling is capital-intensive, and the company said its profitability was hurt by higher financing costs from refinancing existing debt and funding new investments. The early effect of the PAL Cooling joint venture also weighed on earnings, although Tabreed expects that business to contribute more as it grows. Inflation, business development and integration costs also lifted expenses.

Cash generation was stronger. Net operating cash flow rose 20% to Dh882 million from Dh736 million, and cash conversion was 92%.

Connected cooling capacity rose 15% to 1.59 million refrigeration tonnes by the end of September, mainly because of the PAL Cooling acquisition, plus 19,900 refrigeration tonnes of organic growth over 12 months. Cooling consumption rose 0.5% in the nine months and 3% in the third quarter.

"The continued growth in connected capacity, alongside strong operating cash generation, demonstrates the resilience of our business model and provides a solid foundation for the next phase of growth," chief executive Yousif Al Hammadi said.

Tabreed paid an interim cash dividend of 5 fils per share in September, equal to 74% of first-half net profit. It was the second year in a row it paid an interim dividend.

Net debt stood at 4.6 times EBITDA at the end of September, and the company kept investment-grade ratings from Moody's and Fitch. It ran 99 district cooling plants at the end of the period, 81 of them in the UAE and the rest in Saudi Arabia, Oman, Bahrain, India and Egypt.

Tabreed said its priorities are integrating PAL Cooling, improving operational efficiency and controlling costs while pursuing selected growth opportunities.